fell Wednesday after its chief financial officer resigned, despite having another year on his contract.
Harry Hagerty, Caesars' CFO, resigned on Tuesday night in order to allow CEO Wallace Barr an opportunity to name his own executive to the post. The company appointed Wesley Allison, currently a senior vice president and controller, as its interim CFO and will name an official replacement shortly. In the meantime, Allison can consult Hagerty on financial matters as part of a transitional period that ends on May 31.
"Caesars is a great company with great people, and I'm proud to have shared in its accomplishments during my time here," said Hagerty. "I'm also mindful of Wally's right to build his own senior management team and I wish them all the best. For myself, I'm looking forward to finding a new opportunity."
The sudden resignation exposed growing tension in the executive suite and is the latest in a series of management changes since Barr took over as CEO in November 2002. In reaction to the news, Caesars shares were off 19 cents, or 1.5%, to $12.41.
In January 2003, just three months after Barr assumed the helm of the company, chief legal officer Kim Sinatra resigned for "personal reasons" and was replaced by Bernard DeLury, Jr., who was promoted to executive vice president in May 2003. From March through July of last year, the company announced nine promotions, naming new senior vice presidents for marketing and construction and adding a new member to the board of directors.
As can be expected when a new CEO takes over, the management team has been a bit fluid, but Hagerty's departure has taken some on Wall Street by surprise, given his performance as CFO. Hagerty was appointed by former CEO Tom Gallagher exactly two years ago, and over Hagerty's tenure at the company, Caesars refinanced $4 billion in debt, changed the company's name and announced a major revitalization project of its properties.
"We thought Harry has played an important role in the company's cost reduction efforts as well as a much needed discipline on capital allocation and balance sheet management," said Marc Falcone, analyst at Deutsche Bank, in a note. "It is clear to us that there was some management tension."
Ultimately, the sudden departure of Hagerty could raise more questions about the stability of Caesars' management team. But with Barr able to appoint a CFO of his choosing, Falcone said it could result in a more cohesive unit over the long term, and that would outweigh any near-term worries.
"Caesars has clearly demonstrated its ability to improve results and strategically change the direction of the company," said Falcone. "Yesterday's news is likely a minor setback on that course, but we do not think it takes away from the long-term potential of the company."